Are You Co-Signed With An Ex-Boyfriend or Girlfriend?

I’ve broken-up with my boyfriend-girlfriend, and my problem is I co-signed on a car for him/her. I’ve asked them to take my name off the loan and get the car under his/her own name. What should I do to avoid being taken advantage of? Is there anyway for me to get off the loan and make my ex boyfriend-girlfriend pay for the car themselves?

This is a tough situation, and a fairly common occurrence. Obviously, no one co-signs thinking the other person on the loan is going to be a an “ex” at some point in the future. When that changes, finances can suffer.

Still, the good news is that you can usually get you or your ex off a co-signed loan.

Your options when you’re stuck on a loan with an ex:

Refinance the loan

Sell the car

Trade in the car

Keep the car, make the payments, and pay it off

Let the bank repossess the car

File bankruptcy

Most of these scenarios require your ex to co-operate with you at some level. If your ex isn’t willing to co-operate, there are some things you can try (see the last section).

Option #1 – Refinance The Car

What you need: An ex willing to sign documents, and potentially to secure their own financing.

Your local credit union is the place to start. Either you or your ex is going to refinance the car in one name. If your ex wants to keep the car, but doesn’t have the credit to finance it on their own, you might see about putting some money down to help your ex afford the car.

NOTE: I know that making a down payment to help your ex buy a car sounds like a “no chance in hell” idea. However, consider the alternative: The cost of being “on the hook” for your ex’s payments is higher than giving the bank $1,000 or $2,000 to help your ex leave your life forever.

Option #2 – Sell The Car

What you need: An ex willing to sign documents, and also willing to find their own transportation (assuming they’re driving the car).

You can sell a car that you owe money on. All you do is find a buyer, agree to a price, and then contact your lender to finalize the title transfer. You’ll need to be able to pay off the car loan in full – which means you need cash to cover the difference between the loan amount and the sale price – but that’s the only downside.

To complete the sale, you might contact your local car dealership and ask them if they can help you with a pass-thru transaction. The dealer will take care of all the paperwork, make the loan payoff, etc., and you just pay them a fee. Your credit union may offer this service too, so ask around.

Option #3 – Trade In The Car

What you need: An ex willing to sign documents, and also willing to find their own transportation (assuming they’re driving the car).

Trading the car that’s co-signed in for a new car is another option. If you already have a car, you can trade in both your car and the ex’s car and buy one car to replace them (a “two for one” trade, if you will).

Your ex will need to sign a payoff authorization, an odometer disclosure form, and a couple of title transfer documents. Most dealerships will be happy to call your ex on your behalf, and most finance managers know how to ‘sell’ the ex on the benefits of signing the docs.

Option #4 – Keep the Car and Make Payments

What you need: The car, the keys to the car, and a promise from your ex to sign away their interest when the car is paid off.

If you can’t refinance, sell, or trade-in the car, you can always keep it and make the payments. The “trick” is to make sure your ex signs some sort of letter or document stating that they have no interest in the car whatsoever.

If you have the money to hire a lawyer, I strongly recommend that you do so. A lawyer can create an agreement for you that will state your ex is giving up all claims to the car in exchange for being released from financial responsibility. This document will make it very hard for your ex to claim ownership of the car at a later date, sue for use of the car, etc.

If you can’t hire a lawyer, try checking with your local legal aid office. Free legal aid is available in most places, and is based on need.

Option #5 – Let the Bank Repossess The Car

What you need: A willingness to sacrifice your credit rating.

If your ex isn’t willing to sign any documents, and/or refuses to surrender the car, this is an option.

Please understand: Repossession is bad news as far as your credit rating is concerned. The lender will take back the car, sell it at auction, and then file a judgment against both you and your ex for whatever loss they incurred, as well as all their various fees. You can expect a charge of $5,000 plus on your credit.

Still, if you can’t get your ex to “play ball,” this may be your only option.

Just bear in mind that your credit rating effects everything from your ability to borrow money to your car insurance premium to leasing an apartment to getting a job. It’s not fair, but credit ratings impact you in a lot of subtle ways.

Option #6 – File Bankruptcy

What you need: A consultation with a bankruptcy lawyer.

Bankruptcy can be a great solution to many financial problems, but you need to talk to a lawyer first. Most of them will offer a free consultation.

In my experience, there are some benefits to filing bankruptcy that most people don’t know about:

Bankruptcy isn’t as harmful to your credit rating as is commonly believed. In fact, it’s often easier to get a car loan off a fresh bankruptcy than it is to buy a car as a first-time buyer.

In many states, it’s possible to file bankruptcy without losing any equity you may have in your home, money you have in your retirement accounts, tools you may need for your job, etc.

People who file bankruptcy can recover their good credit rating quickly. I’ve seen people establish good credit in as little as 18 months after a bankruptcy.

Again, speak with a lawyer before going down this road. Just know that bankruptcy is highly underrated, at least from my perspective.

Dealing With an Ex That Won’t Co-Operate

If your ex is acting like a baby, you should be the adult.

Finally, if your ex won’t co-operate, there are some things you can try:

Hire a lawyer. For a small amount of money, your lawyer can send a certified letter demanding that your ex make good on their promise to pay, and/or surrender the car to you. A carefully worded letter can often get your ex to “wake up” and use their brain.

Tell them they won. A lot of times, the reason your ex is being difficult is to try and make a point. If you give them the satisfaction of thinking they “won,” they might be willing to work with you. It sucks to give them the satisfaction, but it’s often better than the alternative.

Get a 3rd party involved. You and your ex have a mutual friend or acquaintance that might be willing to mediate. Maybe it’s one of your ex’s parents, their boss, their current girlfriend or boyfriend, etc. These people all have a vested interest in your ex’s happiness and financial situation. Just be careful to ask for help, and appeal to them to facilitate a conversation. If you meet with your ex and his mom at a coffee shop, and you’re 100% professional about things, it will be hard for your ex to act like a jerk.

Offer to pay them to go away. If you tell your ex “If you’ll give me the car, the keys, and sign some paperwork, I’ll give you $1,000 you can use for a down payment on your next car,” you might have some luck. Again, it sucks to give them money, but it’s cheaper than the alternative.

Whatever you do here:

Do not make threats

Do not try to intimidate your ex by having friends go visit them

Do not tell lies to some 3rd party about what’s going on to try and make your ex “do the right thing”, blast them on Facebook, etc.

These things are counter-productive at best, and potentially illegal.

Summing Up

Most people recognize that it’s in their own best interests to either a) make the payments they promised to make, or b) get their ex off their car loan. The “trick” is to take the emotions out of the picture. If you and your ex can’t communicate with one another without it getting personal, it’s time to take a deep breath and be the bigger person.

If that doesn’t work, you can bring in a 3rd party (a mutual friend, their parents, your parents, a lawyer, etc). That’s usually all it takes to get results.

About The Author

Jason Lancaster is the editor and founder of AccurateAutoAdvice.com. Jason has worked in the auto industry since 1998, including nearly 10 years of auto dealership experience. Jason started out as a salesperson and worked his way thru finance manager, sales manager, used car manager, and new car manager. Jason is also a bit of an expert on dealership service and repair, as well as the parts business. Jason has been cited as an auto expert by the BBC, The Huffington Post, Forbes, Newsweek, and more.